South Korean Carrier Didn't Violate Shipping Act in Dispute With US Importer, FMC Judge Rules
An administrative law judge this month denied Illinois importer MSRF’s complaint against South Korean cargo carrier HMM, saying the importer didn’t prove HMM violated the two companies’ service contract. The judge said none of MSRF’s claims before the Federal Maritime Commission were successful, partly because they were based on the terms of the original service contract, which had been amended multiple times mostly “for the benefit” of MSRF.
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The judge specifically said MSRF, a food gift importer, failed to show that HMM engaged in unjust or unreasonable conduct, provided liner service “not in accordance” with the service contract, refused to deal or negotiate with MSRF, or “gave undue or unreasonable preference or advantage to” other customers.
MSRF filed its complaint in August 2022, arguing that HMM only provided it with nine of the 25 containers the two companies had agreed to in their service contract from May to December 2021, the judge said. While HMM claimed to have later fulfilled its container obligations to MSRF, the importer argued that it was “damaged by HMM’s failure to provide space when it needed it the most.”
HMM argued that MSRF failed to "articulate cognizable claims" under the Shipping Act and that there was no evidence to support the importer’s claims. HMM said it never breached the contract and ultimately provided “almost double the minimum quantity commitment of cargo.” At the end of the contract, HMM carried a total of 46.875 forty-foot equivalent units, well above the MQC of 25 FEUs, the judge said.
The judge also noted that the contract between the two companies was amended 14 times, often "at the initiation or for the benefit of MSRF,” and “yet MSRF’s claims primarily rely on the service contract as originally enacted, prior to the amendments.” The amendments included the addition of shipping lanes and the “continuation of 2021 prices during the contract extension.”
Despite this, MSRF ”fails to acknowledge the ongoing communication and negotiation between parties that led to the amendments from which MSRF derived a substantial financial benefit,” the judge said.
The judge also said MSRF didn’t claim there was "any kind of collusion or undue pressure" that caused it to agree to those amendments. Emails also showed HMM provided MSRF reasons the company couldn't accept "certain requests for space," the judge said. HMM told MSRF in one email that it had "ongoing vessel space issues across the board." There was “no indication that reasons provided by HMM for its inability to accept certain requests for space were false,” the judge said.
An MSRF spokesperson said Nov. 28 the company is "disappointed in the ruling and we are evaluating our options." HMM didn’t respond to our request for comment.
MSRF last year filed a complaint against Taiwanese Shipper Yang Ming Transport, saying the container shipping company violated Shipping Act regulations when it failed to supply agreed upon cargo capacity (see 2208230033). An administrative law judge approved a confidential settlement between the two companies in September.